7 SMART WAYS TO AVOID CREDIT CARD DEBT
Anyone who has a credit card risks carrying debt. Don’t let credit cards risk your financial freedom, and stick to our 7 smart ways to avoid credit card debt.
1. Create a budget
The best way to avoid credit card debt is by creating a monthly budget. Set your monthly spending limits, and avoid charges outside your budget limit, unless you really need it.
If you’re unsure how to create a budget, check out our 6 easy steps on how to make a budget.
2. Charge only what you can afford
Don’t use a credit card to finance an unaffordable lifestyle. If you can’t pay-off your entire credit card balance each month, you are overspending. Therefore, avoid credit card debt by purchasing only what you can afford. A good rule of thumb, if you can’t afford to pay cash, you can’t afford to charge it.
3. Pay on time
Staying on track with your credit card payments is one of the best ways to avoid credit card debt. Missing a payment will not only damage your credit score, most creditors will attach late fees and penalties to the original balance making it more difficult to catch up.
4. Pay balances in full
If you want to avoid credit card debt, pay off your entire credit card balance each month. Paying your total balance in full each month, eliminates the risk of getting into credit card debt by accruing interest. Of course, this means you can only spend as much as you can afford to pay off each month.
5. Limit your number of credit cards
The more credit cards you have, the more you can charge. The more you charge, the greater risk you take to be stressed in debt. You may have great self-control, but it’s better not to tempt yourself with thousands of dollars in available credit. Therefore, cut down on the number of credit cards you have to avoid credit card debt.
6. Read the fine print
Credit card agreements contain important terms about interest rates, late fees, and default rates. Credit card companies make money off consumers that fail to pay on time, as well as from the interest that accrues over the revolving debt. Understanding the terms of your credit cards can help you avoid paying fees and high interest rates.
7. Keep a record of purchases
It is important to pay attention to your credit card bills in order to protect yourself against errors and fraud. Comparing your receipts with the statement will ensure you do not pay for unauthorized or mistaken charges. Contact your credit card company immediately if you suspect any fraudulent activity to limit your liability.
Even with our 7 smart ways to avoid credit card debt, sometimes credit card debt is impossible to avoid. However, it’s not impossible to have a plan for paying debt down. If you find yourself stressed in debt whether it be credit card debt, student loan debt, etc. check out our 5 get-out-of-debt steps to financial freedom.
The information provided is general in nature and may not apply to your specific situation.